Former Lieutenant Governor Betsy McCaughey (R – New York) has discovered the formula for delivering a 20 percent corporate-tax rate in 2018 — as the U.S. House wishes — not 2019, as the Senate voted, thus flirting with GOP political suicide.
McCaughey, a senior fellow with the London Center for Policy Research (as am I), offered a delightfully simple plan in Wednesday’s New York Post: “This beautiful committee,” as President Trump dubbed the House-Senate conference, should accept the House’s January 1, 2018 date for the corporate tax to plunge from today’s 35 percent rate to a new, paradigm-shifting 20 percent.
And how would conferees “pay for” such history-making tax relief for American business, one year earlier than the Senate wants? The conference committee should adopt the House’s $1,600-per-child tax credit, not the Senate’s $2,000-per-child credit. As McCaughey explains, the ensuing $150 billion savings would cover more than the roughly $127 billion needed to make U.S. companies globally tax-competitive — in 2018.
Today’s per-child tax credit is $1,000, so inserting the House language into the final tax measure would increase by 60 percent the tax credit for “the children.”
However, this would not double that tax benefit, as the Senate desires. In exchange for a mere 60 percent more love than today’s tax code shows our boys and girls, every American — even the childless — would benefit from giving U.S. job creators their biggest tax cut ever, and in just over three weeks, not 13 months.
McCaughey, whose 1994 New Republic analysis fatally wounded HillaryCare, has worked her magic again, but in reverse: Rather than kill a bill that deserved to die, her proposal would save Republicans from a possibly recession-creating one-year delay in corporate-tax relief. If she prevails, CEOs would be incentivized to hire, invest, and produce, with the full advantage of the 20 percent corporate rate — as soon as New Year’s Day.
This would be far better for all Americans than if business owners and executives sat on their hands for 12 months, awaiting these inducements until 2019 — almost certainly slowing the economy. Such doldrums would crush GOP prospects in the November 2018 midterm elections as well.
This great policy is also great politics. Although it probably would do little for growth, the House’s expanded child credit would give parents 60 percent more per kid than they see now. This qualifies as middle-class tax relief, and may have a positive cultural impact as well.
More importantly, a 20 percent U.S. corporate-tax rate, significantly below the global average of 23 percent, would likely unleash economic growth well above last quarter’s 3.3 percent GDP expansion. (Keep in mind: a 20 percent corporate tax would be nearly 43 percent below the current 35 percent commercial levy.) Next year’s output boost could dispatch the lie that America is cursed with a stagnant “new normal,” à la Obama’s comatose 1.5 percent average annual growth.
If the economy soars next year, Republicans would likely keep the U.S. House next November. And if they maintain their existing margin and gain at least eight Senate seats among the 25 that Democrats must defend, Republicans could win a filibuster-proof 60-vote majority. This scenario would vindicate House minority leader Nancy Pelosi (D – California): The $1.5 trillion GOP-Trump tax cut indeed could be “Armageddon,” as she called it — not for America, but for Democrats.
Republican conferees should follow McCaughey’s other key piece of advice: They should heed the Senate and make Obamacare voluntary by junking the individual-coverage mandate. Those who want Obamacare may keep it. Those who do not could make other arrangements without being taxed 2.5 percent of household income or $700 (whichever is higher) for not buying something that Uncle Sam demands they purchase against their will. Since 80 percent of the 6.7 million Americans who paid this tax penalty in 2016 made less than $50,000, sparing them this costly indignity also constitutes a middle-class tax cut.
Once again, Betsy McCaughey is right, as she so often is. Peace be upon her.
This is the whole reason society is broken. We will penalize parents who want to have more children (who we will need to pay social security later – assuming we aren’t going to import wealthy and hard working rich immigrants) to give corporations – many who already have millions or billions – even more.
how about cutting spending? How about cutting crony CORPORATE welfare? How about the useless defense programs that are sold costing a few billion, but fail and we just keep throwing money down the abyss (F35). No, can’t do that, these redistribution of the wealth have to continue, so we need to tax the working middle class to death to keep them going.
This is supposed to be conservative/libertarian, but it wants the crony plutocrats to get a BIGGER government, more corporate welfare, make the rich pay less while the middle class is destroyed by their policies, and the few remaining pay more? Do you realize why Trump was elected?
I really don’t care if Apple is taxed with an exicise or AMT of 35% – it has billions. I’d rather the middle class pay Apple’s original Ireland tax rate of 0.002%. For that matter I don’t see why any citizen making under $100k should pay ANY tax, income or payroll.
When you lower the corporate tax, corporate taxes will be lowered globally and the result will be a massive windfall for corporations while government takes away essential benefits from the people they are supposed to represent. US will not move any manufacturing jobs back to the US by lowering the corporate tax rate and the swamp knows it.
To stop the rip-off and give-away, the Institute on Taxation and Economic Policy recommends that Congress pass laws to force American multinational corporations to pay U.S. taxes on their offshore profits, change acceptable depreciation deductions, prohibit deductions based on “phantom” expenditures, require transparent financial reports, and “reinstate a strong corporate Alternative Minimum Tax.”
The Trump swamp was not willing to do what is beneficial to the “people” but the Wall Street swamp is doing what is right for Wall Street. The government all over the world will collect nothing from corporations because we will have a corporate tax rate war fighting for the lowest corporate tax rate. The corporations will have more money to automate and there will be less jobs for everyone.
This is a Republican experiment and everyone will soon discover that it will be a total failure but they will keep saying that it takes time to see the benefits.
Trump won the presidency because he wanted to stop immigration and that’s the only reason white voters in small towns voted for him. Very few wealthy people were interested in the tax cuts. The Republicans are not doing what is right for their voters because their solution to very difficult and complex problems is tax cuts.